Shipping Industry Combating Climate Change International Shipping and Shipowners Reducing GHG Emissions Kristian R. Fuglesang Bonn, 5th August 2010

International Shipping’s Environmental Performance Oil pollution – reduced by more than 95% since 1970s Engine efficiency - improved by more than 20% in last 15 years Toxic air emissions (SOx) – being further reduced by approximately 90% over the next 10 years GHG emissions - adoption of voluntary measures reducing Volatile Organic Compound (VOC) emissions by over 80% - IMO programme of measures in place to address CO2 emissions

Emission of CO2 Source: IMO

CO2 Emissions per Unit Load by Transport Mode Large Tanker Large Containership Railway Coastal Carrier Small-size Commercial Truck Airplane Standard-size 100 200 300 400 398 226 49 11 6 3 1 Units Relative Shipping energy efficient Source:Ministry of Land, Infrastructure and Transport (Japan): The Survey on Transport Energy 2001/2002 MOL (Japan): Environmental and Social Report 2004 4 4

World trade growth

Why International Shipping is different Global industry – worldwide trading by international fleet from developing and developed countries Regulated internationally, on a level playing field basis, principally through the IMO Extensive framework of international regulations in place for all ships covering: design, construction, equipment and operation - i.e. safety, security, and protection of the marine environment, including air emissions

Why International Shipping Is Different

Measures applied to reduce GHG emissions Technical measures: incentivising designers, manufacturers, owners, etc. - Design Index applicable to all new ships Operational measures: incentivising operators, charterers, shippers, ports, etc. - Performance indicators applicable to all ships, irrespective of flag Economic measures: to complement other measures - To be equally applicable to all ships

Measures being applied to reduce GHG emissions Technical measures: owners working with designers, manufacturers and owners - Voluntary rating system under development Operational measures: owners working with charterers, port authorities and terminal operators - Developing optimal arrival and optimal speed methodologies - Voluntary VOC reduction measures already adopted - Energy Efficient Management Guidelines published Economic measures: owners working with charterers and others - Under discussion and evaluation at IMO

Virtual arrival project Better coordination of tankers’ arrival in port. Cooperation among several stakeholders Improve efficiency when a tanker is otherwise likely to wait until terminal is ready for her Often tankers sail at full speed and then have to wait for days before the terminal is ready Instead: agreement between charterer and shipoperator enabling the vessel to sail at optimum speed to arrive when terminal is available

Virtual arrival project Win-win situation Based on trust and transparency “virtual arrival” potential: Speed reduction leads to considerably reduced fuel consumption >15% CO2 reduction Reduction in nitrogen and sulphur emissions Decreases port congestion Fuel costs: 60 – 80% of operation/running costs

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